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The RE Investment News: Third Qtr 2014

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The RE Investment News is the quarterly newsletter for Real Estate Professionals from Mid-America Association of Real Estate Investors based in the Kansas City Metro and serving the Real Estate Industry since 2003.

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The RE Investment News: Third Qtr 2014

  1. 1. 2014 RE investment News RE Vendor Expo Charity Raffle Expert Auction Benefit Harvesters Perfect Storm Uncertain Future Apartment House Investing Fundamental vs Technical Houses to Avoid Creative Seller Financing Deal Structuring
  2. 2. 2 RE investment News 2014 MAREIMid-America Association of Real Estate Investors A Real Estate Community FAST IN AND OUT Time is money — we’ll get you back to work quickly.  Dedicated Pro Desk Associates.  Two hour advance order pulling. In Store Hands On—How To Workshops Want to learn How a project is completed. Check out our work- shops.  In store workshops each month, check out our website and your local store.  Access step by step video 24-7 on our website—look for our Project Guide Library 10% Price Guarantee If you find a lower price on identical in-stock item  We will match the price & beat it by 10%.  Excludes special orders & bid pricing and others—see website for complete details. GREAT PRICES JUST FOR PROS We Offer everyday low prices, plus more ways to save on larger orders.  You can count on competitive pricing on everything in every department  Volume pricing discounts available on purchases as low as $2,500.  Instant bulk price savings available 1000s of items. MAREI Member Discount MAREI Members receive a rebate of 2% on all purchases, twice a year. Must be registered through MAREI with Home Depot and register your tender accounts with the Home Depot and spend a minimum of $2500 in a 6 month period. MAREI Business Partner Discount
  3. 3. 2014 RE investment News 3 A Publication of Mid-America Association of Real Estate Investors MAREI Office: 8014 State Line, Suite 210, Leawood, KS 66208 MAREI Phone: 913-815-0111 LEGAL: Mid-America Association of Real Estate Investors, MAREI, does not render any legal, tax or economic advice. MAREI does not investi- gate its members, officers, directors, employees, agents or contrac- tors. Persons should consult their own council, accountant or other professional advisors as to the legal, tax, and economic risk in mat- ters concerning real estate and other investments. CONTENT: Products, services, investment opportunities, etc. may be offered by members, guests, business associates and or content from MAREI. MAREI does not endorse any product, service, investment opportuni- ty, et, that may be offered formally or informally. Persons should complete their own due diligence and seek advice from their own counsel, accountant or other professional advisor prior to doing busi- ness with anyone. TO ADVERTISE: 1/8 Page Ad: Member Price $65 / Non-Member $130 1/4 Page Ad: Member Price $75 / Non-Member $150 1/2 Page Ad: Member Price $85 / Non-Member $170 Full Interior Ad: Member $100 / Non-Member $200 Inside Front Cover: Member $200 / Non-Member $400 Inside Back Cover: Member $200 / Non-Member $400 MAREI MEETINGS & SEMINARS Held Monthly on the 2nd Tuesday of the Month Career Education Systems Top Floor Ward Parkway Shopping Center 8600 Ward Parkway Kansas City, MO 64114
  4. 4. 4 RE investment News 2014 From the Publisher I have been talking to people in the industry and reading article after article. First off, banks have gotten tired of dealing with all the new rules and regulations on non- performing loans, so rather than deal with them, they are selling them to people outside of the banking industry. They are selling in bulk to hedge funds who in turn are breaking up these loans and selling to the smaller real estate in- vestor. Secondly, REO property is being bought up in bulk by these same hedge funds who are hold- ing on to them for cash flow and waiting for the market to increase prices. So there is a short- age of REO property. Out of country investors who were investing in US stock market and their own country invest- ments are buying up houses in areas like Kan- sas City for rental cash flow. Or are becoming the funding source for partners that work local and flip houses. So the real estate investing market that we knew in past years has a whole new face. Houses are going to be harder and harder to come by and investors who want to deal with houses are going to have to work harder to find the motivated seller or REO property to pur- chase. Or turn to new sources of investing to get to the property such as tax sale investing that Tom DiAgostino taught at MAREI last month and defaulted notes that Note School taught last year. With all the new rules and regulations on lending, banks are still trying to figure out what they can and can’t do and the creative financing is going to come back in a big way, but again with new rules for the investor to know and understand. So learning this niche is going to be vital, so we have invited an expert on this topic to join us in Septem- ber. Here at MAREI we try to stay on top of the indus- try and bring you the most important news and ed- ucation to keep you on top of your business. We are also working to bring you updates when you need them so you can take action and contact your government officials when needed. Now, more than ever it is important for those of us in the industry to work together and be informed so we can adapt and change as needed and have a say in shaping the new real estate investing industry that is already upon us. Kim A. Tucker Publisher & Founder of MAREI 4 RE investment News 2014
  5. 5. 2014 RE investment News 5 BUSINESS directory Service Company Contact Phone Web Auction Company Cates Auction Ray Bucklew 816-781-1134 CatesAuction.com Contractor Building Trades Robert Massey 816-868-1817 Contractor Discover Heating & Air Curt Whitlock 816-500-2970 Discover HVAC.net Contractor Elite Contractors Jim Murphy 913-207-6973 Contractor Supply Choice Cabinets Karl Dunivent 816-343-8887 ChoiceCabinet.com Contractor Supply Home Depot George Neal 816-510-9199 HomeDepot.com Contractor Supply Odor Universe Mike Riddle 816-718-9136 OdorUniverse.com Contractor Supply Sherwin Williams Mike Steiner 816-589-8506 SherwinWilliams.com Environmental Titan Environmental Kyle Gunion 816-561-0959 TitanKC.com Hard Money Great Plains Funding George Hersch 913-735-6605 GreatPlainsFunding.com Hard Money Investor Choice Funding Dave Williams 303-500-7088 InvestorsChoiceFunding.com Hard Money Kansas City Investor Funding JJ Pawlowski 816-916-4593 KCInvestorFunding.com Hard Money Longhorn Investments Mike Friedl 913-634-6386 LonghornInvestments.com Home Buyer kcmoHomeBuyer Don Tucker 816-200-2198 kcmoHomeBuyer.com Insurance Asset Protection Insurance Lisa Goodner 877-752-2742 APIAProtects.com Insurance Missouri Farm Bureau Stephanie Cunliff 816-781-4370 MOFBInsurance.com Mortgage Pulaski Bank Beth Langston 816-234-8660 PulaskiBank.com Realty Realty Resource Kim Tucker 816-523-4400 RealtyResourceKC.com Realty & Management Arrow Realty Candace Davis 913-956-5003 ArrowRealtyKC.com Realty & Management Jamieson Home Team Kevin Jamieson 913-384-8331 JaimesonHomeTeam.com Staging ShowHomesKC Kent Welch 913-449-4555 ShowHomesKansasCity.com Title & Escrow Accurate Title Jackie White 913-338-0100 AccurateTitleCo.com
  6. 6. 6 RE investment News 2014 Harvesters and its network of agencies provide a helping hand to tens of thousands of people in need every week. As the community’s response to hunger, the food bank could not function without the generous support it receives from individuals and companies across our community. Carla, director of the Don Bosco Center, a Harvesters agency, helps individuals and families struggling to make ends meet every day. “Donating a can of food seems like a small thing to the average person,” she said. “But when you’re a parent look- ing at your children’s faces and the empty cabinets, it’s actually a major thing.” Harvesters' mission is to feed hungry people today and work to end hunger tomorrow. As this area's only food bank, Harvesters is a clearinghouse for the collection and distribution of food and related household products. We've been helping people in need since 1979 by Collecting food and household products from community and industry sources  Distributing those products and providing nutrition services through a network of nonprofit agencies  Offering leadership and education programs to increase community awareness of hunger and generate so- lutions to alleviate hunger Our network includes more than 620 nonprofit agencies throughout our 26-county direct service area, including emergency food pantries, soup kitchens, homeless shelters, children’s homes, homes for the mentally disabled and shelters for battered persons. Our network provides food assistance to as many as 66,000 different people each week. Harvesters is a certified member of Feeding America, a nationwide network of more than 200 food banks, serving all 50 states. Many Ways to Donate Harvesters can turn a $1 donation into 5 meals. How do we do it? By leveraging that dollar to acquire, transport, sort, store and distribute enough donated food to feed five people. Where else can you get that kind of return on your investment? We are proud to be recognized for excellence in the use of donated resources. Harvesters currently uses less than 3 percent of these resources for administration and fundraising, with the bulk being spent in program areas directly related to food acquisition, food distribution and nutrition education. Below are a number of ways you can contribute financially to Harvesters and help us accomplish our mission to end hunger in our community. Feeding the Hungry Harvesters Community Food Network MAREI’s Chosen Charity for 2014
  7. 7. 2014 RE investment News 7 If you file taxes in Missouri, you can increase the value of your donation. Planned giving You can be a philanthropist even if you are not wealthy by making a gift to Harvesters during your lifetime or at the time of death. Heart of America United Way You may designate a specific agency like Harvesters as the recipient of your contribution. MAREI Annual Vendor Night Buy a Raffle Ticket, Buy an Expert, Just Donate. Go to Harvesters.org or find out more about Expo Below: DONATE ONLINE One-time gifts Your gift today, whatever the amount, significantly impacts the lives of the hungry in our community. Monthly giving Become a part of our monthly donor program and spread your gift out over 12 months. Memorials/Tributes Give a gift to Harvesters in memory of a loved one, or to honor a birthday, anniversary or other important occasion. Virtual Food Drive Donate today through our fun, interactive online "food drive," or sponsor your own Virtual Food Drive. SPECIAL EVENTS Purchase Tickets Buy a ticket or sponsor one of Harvesters’ annual events. Sponsorship Opportunities Explore ways your company or organization can sponsor one of Harvesters’ annual fundraising events. OTHER WAYS TO DONATE Matching gifts Double your gift to Harvesters with your employer’s help. Gifts of stock and mutual funds Make a donation of stock or marketable securities to Har- vesters and receive a tax benefit as well. Missouri tax credit #MAREIVendorEXPO July 8th, 2014 Networking Vendors & Raffle Tickets Expert Auction To Benefit Harvesters Details at MAREI.org/EXPO
  8. 8. 8 RE investment News 2014 All Proceeds to go to Harvesters! Time: 6pm to 9pm Date: Tuesday July 8th 2014 Where: Career Education Systems Ward Pkwy Shopping Center 8600 Ward Parkway Kansas City, MO 64114 Mid-America Association of Real Estate Investors Main Monthly Mtg. OPEN TO THE PUBLIC COST: DONATION TO HARVESTERS Build Your Team with MAREI’s Business Associates Buy an Expert at Auction Win a Prize Contact Kim@MAREInet.com or Call 913-815-0111 Sign Up: MAREI.org/EXPO
  9. 9. 2014 RE investment News 9 Michelle Winberry Due Diligence Houses & Notes Andrew Syrios Buy & Hold Investing Single & Multi Family Paul Worcester Apartment House Investing Donald Tucker Rehab & Flip Single Family Brian Winberry Real Estate Investing Houses & Notes Kim Tucker Marketing Social Media
  10. 10. 10 RE investment News 2014 The Perfect Storm Three Factors Driving the Surge in 1031 Exchange Activity in 2014 By Scott R. Saunders In the movie The Perfect Storm, the convergence of two large storm systems led to unu- sual weather conditions that ultimately resulted in the demise of the ship and its crew. In the real estate market, the convergence of much higher tax rates, a very strong commer- cial market, and a recovering residential market has resulted in a surge in 1031 exchange activity this year. Although real estate investors are experiencing solid gains, they are faced with a head- wind of high taxation which threatens to significantly reduce investment returns. Conse- quently, investors are actively seeking out ways to reduce their tax liability. Once again, Section 1031 of the Internal Revenue Code has emerged as a valuable tool for boosting net investment returns by reducing tax liability, and for preserving capital for reinvestment into better performing “like‐kind” replacement properties. This article explores each of the three factors creating this “perfect storm.” FACTOR #1: HIGHER TAX RATES Tax rates, and their impact on an investor’s net investment return, can drive investment decisions. Econ- omist Art Laffer posited that, as tax rates increase, actual tax revenues can decrease as a result of ef- forts by investors to mitigate tax consequences. In essence, as tax rates increase, an investor’s motiva- tion to defer or postpone immediate taxation also increases. This is reflected currently in an increase in 1031 exchange activity. Many investors are surprised to find out that today they may face four different taxes and, when com- bined together, the aggregate impact can result in a large tax bill owed to the government: A. Depreciation Recapture: Depreciation recapture is taxed at 25% on all depreciation recapture. In the real estate market, the convergence of much higher tax rates, a very strong commercial market, and a recovering residential market has resulted in a surge in 1031 exchange activity this year.
  11. 11. 2014 RE investment News 11
  12. 12. 12 RE investment News 2014 CRE opportunities. The demand for quality CRE as- sets is so strong that CRE activity is now beginning to expand to secondary and non‐core markets. All of this CRE activity is contributing to the surge in 1031 exchange activity as CRE investors utilize 1031 to minimize the tax impacts of their transactions. Sales of office, retail, multifamily, hospitality and land were approximately $370 billion last year, 18% higher than the year before, and the strongest year since 2007 and this momentum is continuing in 2014. Va- cancy rates have decreased and net absorption has been strong in the office, industrial and retail market. Last year and continuing into this year, investors con- tinue to be very active in the hotel property sector which was up 40%, industrial increased by 23%, of- fice up by 18% , multifamily rose 14%, and retail rose 10%. In addition, REITs appear to be very active this year with a projected pace of acquisition and expend- itures running about 60% higher than the pace of dis- positions. More evidence of the strong commercial activity can be seen by the year‐to‐date rent growth in the U.S. apartment market is the best since the economy started to recover from the Great Recession B. Federal Capital Gain Taxes: Federal capital gain taxes are assessed on the remaining economic gain depending on an investor’s taxable income. Investors in the highest bracket pay at a 20% rate and a 15% capital gain tax rate applies to other investors. C. Net Investment Income Tax: Pursuant to IRC Sec- tion 1411, an additional 3.8% surtax applies to taxpayers with “net investment income” who exceed certain threshold income amounts. D. State Taxes: Investors must also pay the applicable state tax (which can be as high as 13.3%). FACTOR #2: ROBUST COMMERCIAL MARKETS Currently, commercial real estate (CRE) prices nation- wide are about 3% above the previous market peak in 2006. Domestic commercial investors, institutions, and real estate investment trusts (REITS) continue to ex- hibit a strong appetite for quality commercial proper- ties. International investors see the U.S. as a safe ha- ven, and their demand further fuels CRE activity. Commercial investors have strong borrowing and buy- ing capacity, allowing them to capitalize on favorable
  13. 13. 2014 RE investment News 13 However, since home buyers are generally more sen- sitive to increases in the interest rate than CRE inves- tors, rising interest rates in the future could have a negative impact on demand for single family home purchases. 1031 EXCHANGES The “perfect storm” resulting from the convergence of these three factors has led to an increase in 1031 ex- change activity as investors turn to this powerful tax strategy to preserve investment equity and improve returns. This increase in activity has led to a signifi- cant increase in demand for secure, knowledgeable, and service‐oriented qualified intermediary (QI) ser- vices. As always, investors should discuss their tax situation with their tax advisor to assess the potential value of using Section 1031. according to Axiometrics Inc. FACTOR #3: RESIDENTIAL HOME PRICE RECOV- ERY According to the Case‐Schiller Index of 20 major cit- ies, home prices nationwide have recovered by about 20% from the market trough. Among the nation’s 35 largest metro markets, all but St. Louis and Kansas City have experienced year‐over‐year home price increases as of April, 2014. Those with the most nota- ble annual increases include Riverside (22%), Las Ve- gas (22%), Sacramento (16%), and Orlando (16%). Forecasts show about one‐third of the nation experi- encing home appreciation higher than the national av- erage over the next 12 months. Rents on single family rentals have also increased, rising by 2.3% on a year- over-year basis. Also, the lack of new home construc- tion during the Great Recession has led to a shortage of new single family homes, further pushing up home prices. The recovery of residential home prices is another fac- tor causing an increase in 1031 exchange activity. Keep Your Profits, 1031 Exchange Your Way to Wealthy! With Greg Schowe Tuesday August 12th 6:00 pm MAREI Main Meeting Details: MAREI.org/Exchange No charge MAREI members Guests $25 at Door Join or PreRegister Online ExchangeSmart Don’t pay capital gain taxes APIExchange.com
  14. 14. 14 RE investment News 2014 Uncertain Future Legislative proposals are afoot to significantly alter or eliminate capital gains tax deferral on like-kind property. By Scott R. Saunders Like-kind exchanges have been a vital part of the Internal Revenue Code under Section 1031since 1921. A 1031 exchange allows an in- vestor to defer the recognition of capital gains when exchanging one appreciated investment property (the “relinquished property”) for another “like-kind” investment property (the “replacement property”). Most commercial 1031 exchanges today are orchestrated transactions in which an investor uses a qualified intermediary (QI) to facili- tate the sale of the relinquished property to one party and the purchase of the replacement property from another party. The capital gain inherent in the relinquished party is not taxed upon its transfer. However, since the basis of the relinquished property becomes the basis of the replacement property, the capital gains tax is not elimi- nated, it is merely deferred until the property is sold, or exchanged for non-like-kind property. Contrary to popular myth, Section 1031 is not a loophole or a tax savings vehicle. As mentioned above, the capital gains tax is not avoid- ed — it is merely deferred. This outcome is based on sound tax policy. The essential logic is that the investor, in exchanging one appreciated property for another like-kind property, has not realized the gain inherent in the relinquished property. The investor has merely changed the form of his investment. Since the basis of the relinquished property becomes the basis of the replacement property, the built-in gain is still there; it will be taxed later when the investor actually realizes the gain by selling the property for cash. Section 1031 accurately reflects the economic reality of investment continuity in which no profit is realized, thus there is no premise for taxation. Over time, 1031 exchanges have become an important fixture in the economy and the real estate industry. This is particularly true in the commercial market, where approximately 25 percent of all transactions involve an exchange on either the sale or purchase. What’s more, 1031 exchanges allow investors to freely adjust their investments among like-kind properties, allowing for a more efficient allocation of capital. Exchanges allow investors and business owners to change geographic locations, consolidate, diversify and redeploy into different types of investment assets. This commercial activity creates jobs, financial opportunities and provides a valuable stimulus to many economic sectors. Section 1031 Under Siege There are currently three different proposals that the federal government is weighing, which would significantly alter Section 1031: Do you have concerns about Government changes or interventions that change the real estate investing industry. Join your local REIA and help
  15. 15. 2014 RE investment News 15 1. Former Sen. Max Baucus (DMontana), who became U.S. ambassador to China ear- lier this year, released a draft proposal when he was chairman of the Senate Fi- nance Committee that would potentially eliminate 1031 exchanges. His proposal, which is still before the Senate Finance Committee for discussion, contains other provisions unfavorable to real estate invest- ments, including lengthening depreciation schedules for commercial and residential properties from 39 and 27.5 years, respec- tively, to 43 years for both and characteriz- ing gains from real estate sales as ordinary income, instead of capital gain. 2. U.S. Rep Dave Camp (R-Michigan), chair- man of the House Ways and Means Com- mittee, has released a proposed tax bill eliminating all Section 1031 exchang- es beginning Jan. 1, 2015. 3. President Obama, in his 2015 budget pro- posal, proposes limiting the amount of capi- tal gains deferred in a 1031 exchange to $1 million (indexed for inflation) per taxpayer per taxable year, beginning Jan. 1, 2015. Unintended Consequences The motivation behind these proposals is to increase tax revenue. The effect is to target the real estate industry, particularly real estate investors and business owners. Other professionals involved in commercial trans- actions would also be negatively affected. The above proposals appear to be based on calculations that do not consider that if in- vestors are unable to defer gains by using Section 1031, many prospective sellers will simply hold on to their properties and will not sell at all. Most of the projected additional tax reve- nue will never materialize because investors with significant gains will simply hold onto their property rather than face a sizeable tax consequence. The result would be a significant decrease in transactional activity, and a significant re- duction in the inventory of available in- vestment properties. Potential Ripple Effects This would result not only in reduced com- missions for commercial brokers, but would also have a negative impact on jobs across a wide array of ancillary services that are also involved in exchange transactions. Banks and commercial lenders would see reduced activity, as would title companies, escrow agents, appraisers, environmental companies, and many other services typical- ly involved in commercial real estate trans- actions. Eliminating Section 1031 would have a neg- ative impact that would extend far beyond the real estate market, into the overall na- tional economy. It is foreseeable that the elimination of Section 1031 would result in a decrease in property values as investment properties become more illiquid. This loss of equity in real estate would result in less spending and investment in the econ- omy overall, which would ultimately result in lost jobs, increased unemployment and billions of lost revenue each year for the national economy. This is not the first time the government has tried to reduce the tax deferral benefits of Section 1031. In fact, there have been nu- merous attempts to limit exchanges in the past. One proposal was to create a much more narrow definition of like-kind proper- ty. This would have had a significant damp- er on real estate activity. The key to preserving 1031 exchange tax deferral is to educate legislators on the eco- nomic benefits of exchanging. Once govern- ment representatives really understand that exchanges actually promote transactional activity, thereby creating jobs and other taxable income that helps small and midsized business prosper, they realize Sec- tion 1031 is a vital part of the U.S. econo- my’s economic engine. Exchanges encourage property owners and business owners to preserve and manage cash flow, thus encouraging U.S. business to reinvest domestically rather than offshoring business activity. Exchanges also help foster higher property values which increases the property tax base. 1031 Exchange Supporters In light of these potentially dire conse- quences resulting from the elimination of Section 1031, the Federation of Exchange Accommodators (FEA) continues to educate legislators about the essential economic value of 1031 exchanges. The FEA and roughly 42 industry groups have filed comments with the Senate Fi- nance Committee advocating the retention of 1031 exchanges, and they continue to work to enlighten Congress on the job- creating aspects of 1031 exchanges. Scott R. Saunders is a senior vice president of Roseville, Calif.-based Asset Preservation Inc., a national qualified intermediary and Stewart Title subsidiary. Questions regard- ing 1031 exchanges can be directed to him at scott@apiexchange.com or 888-531- 1031. Greg Schowe of Asset Preservation Inc will be our guest speaker at MAREI’s August Monthly Meeting. See Page 19.
  16. 16. 16 RE investment News 2014 1. Targeting a Qualified Property The first step is to locate an apartment investment with value. I look for inefficiency in the market. I want to find an apartment in- vestment that appears to be able to be acquired at a discount to its true value. It is easiest to do this by analyzing as many prop- erties as possible. My acquisitions team subscribes to the 100-10-3-1 rule: review 100 properties, offer on 10, negotiate 3, and buy 1. In my experience, the more apartment investments I evaluate, the clearer the potentially great deals appear to me. 2. Communicating With the Seller/Broker Once I’ve found a deal I’m interested in, I speak to the seller or broker as soon as possible. During the first conversation I real- ly have two main goals: to communicate that Worcester Investments is a serious buyer, and to quickly determine what value I might be able to add to the property in question. My goal is to help the seller, to make his/her life better. I try to accomplish these goals by asking pointed questions that provide clues as to how I may solve a problem the property struggles with and that portray that we are a serious buyer. For example, I may ask any of the following questions: “What is the situation with the seller and why is he/she selling?” “What is the seller’s ultimate goal?” “Where do you think this will trade?” “Who pays each utility: Gas? Water? Electric?” “How many units are there ad what is the unit mix?” “What is the average in-place rent?” “Should I submit an offer now, or are you going to wait for a call for offers?” “If I were to offer _______, what do you think the seller’s response would be?” While I complete these initial questions, I always request access to extensive property information: a recent rent roll, a recent, preferably trailing, operating statement (also known as a profit and loss statement), and a property package (also known as an offering memorandum). It is necessary for me to obtain these in order to underwrite the property at the standards we have in place, so it is best to request this information as early as I can. Next I will request to schedule a tour of the property. If I have strong interest in the property, I will try to get this part done as soon as possible. Whether I underwrite or tour the property next doesn’t necessarily matter, as long as both are completed, ideally within a few days of each other. 3. Touring the Potential Property Investment I try to arrive at the property at least 15-30 minutes early so I can drive the neighborhood to get a feel for the surrounding ar- ea. I always record my drive-around, and even parts of the tour, so I can reference them later if necessary. The first thing I do when the tour actually begins is interview the property manager and/or whoever has been working at the property the longest. In my opinion, the interview is the most important part of the entire tour. I may ask any of the following questions: “What is the unit mix and number of bathrooms in each unit type?” Ten Steps A p a r t m e n t I n v e s t i n g By Paul Worcester
  17. 17. 2014 RE investment News 17 Be sure to see the Worcester’s Seminar Multi Family Investing A Local Perspective Saturday August 23rd 8am to 5pm Hosted by MAREI Details at MAREI.org/Apt
  18. 18. 18 RE investment News 2014 “What is the square footage of each unit type?” “Does the rent roll I have portray the actual in-place rents?” “How long has it been since the rents have increased?” “Do you offer specials or discounts? If so, please elabo- rate.” “Who pays the gas, electric, water/sewer, and hot water?” “Do you have any unusual contracts I should know about?” “What other income do you collect, including RUBS (resident utility billing system)?" “What is the delinquency?” “If you have an opportunity to put money anywhere into the property, where would you make your first improvements?” “What are your reoccurring problems, things that annoy you about the property?” “How do you generate your traffic?” Once I have completed the interview, I check out a sampling of 4-8 units, recording and photographing this part of the tour as well. I ask questions and take notes, documenting anything that may be of interest. Before leaving, I try to speak candidly with the broker or owner and give them my immediate thoughts and get further feedback on the pricing and other desires of the owner, such as why he or she is selling. 4. Underwriting the Financial Performance of the Property Underwriting the property is perhaps the single most important step to the entire investment, as it allows for financial analysis and risk mitigation. Using the rent roll, profit and loss state- ment, and offering memorandum, extensive and accurate un- derwriting helps us determine whether or not the property is capable of redeeming its value, and in what areas we can im- prove the financials. The numbers we come up with in the un- derwriting process determine what a comfortable strike price (the price we feel comfortable paying) would be, which is why we underwrite a property multiple times before closing. The documents we require have very specific functions in the underwriting process. A rent roll is a list of every unit, vacant, occupied, down, and leased, that the property consists of. Rent rolls typically include information such as the current rent per unit, the length of each lease, other income the property re- ceives from each resident, and what kind of discounts any of the residents currently receive. An operating statement lists all of the expenses and income of the property. These are typically broken down into specific categories (we use eleven), which allow us to more accurately determine where the property spends too much or too little. The offering memorandum typi- cally contains information like the unit mix, square footage of each unit type, and useful statistics and pictures regarding the property and the neighborhood. Oftentimes, the documents required for us to underwrite a property are unavailable or out- dated. It is important to be persistent in obtaining the most re- cent copies of these documents, but that isn’t always possible. We try to be prudent in our estimates anyway, but we are even more so when this is the case. Over the past several years, our underwriting template has evolved frequently to become what it is now. We use an Excel- based proprietary document that lets us quickly plug in num- bers without having to manually calculate advanced equations for each new property. This saves us time and stress, but we often make it a point to double check some of the key figures manually to ensure its accuracy. 5. Negotiating the Purchase Contract If you believe, like I do, that doing business is making someone’s life better, then executing a contract should be mu- tually beneficial. A contract is a written agreement covering necessary terms executed by all parties, with the purpose of providing everyone their end goal. When I am negotiating a contract with a seller of an apartment community, the single most important factor in determining my success is my under- standing of what the seller needs, wants, or doesn't want. I consider it a successful interaction when I can understand the seller’s desires and respond accordingly, while maintaining a healthy relationship. Oftentimes I do not end up buying the property for sale, and that is okay, as I often am not the best buyer to meet the needs of the seller. But when I am the best buyer to meet his or her needs, I try to structure the contract such that it does just that. For example, when we acquired the Northcrest Apartments for $3M in November 2010, there was at least one offer we know of that was higher than ours. If all I know is that the seller is asking $3.5M for the property, then my offer may not meet all of the seller’s needs. In this case, however, I understood that the seller of Northcrest desired to sell quickly for cash, as it was the end of the year and the bank wanted to move the property be- fore the new year. I believe our ability to close quickly played a part in our offer being chosen over others, as the offer we sub- mitted proposed a 30 day closing period with no financial con- tingencies. 6. Conducting Thorough Due Diligence Due diligence is typically completed after the execution of the purchase contract. By the time we get to this point, I have typi- cally toured the property, interviewed the owner or manager, and scrutinized the financials. The end purpose of due dili- gence is to verify that what I already assume to be true about the property is, in fact, accurate, matching up with all the find- ings of my previous financial analysis. If the property is accu- rately represented, we can close with no re-trading. (We always try to avoid a re-trade, which is why it is imperative to exten- sively complete the previous steps of the process.) If there are major items of misrepresentation, either intentionally or out of ignorance, then I may request that the seller compensate me to resolve the new findings. We utilize multiple divisions of our company to conduct and oversee the due diligence process. We’ve developed a series of checklists that help us ensure we’ve done everything neces- sary to prepare for takeover. During the due diligence process, we thoroughly inspect each building, each unit, the parking lot,
  19. 19. 2014 RE investment News 19 the foundations, all contracts and lease agreements associated with the proper- ty, all financial documents, utilities, the laundry set-up, roofs, and many more. Every part of the property is analyzed inside and out by qualified experts. We also interview the current residents and property staff. Conducting thorough due diligence is necessary in order to fully prepare for the stabilization period and all that it will require. The goal of due diligence is to truly understand what it is we are buying. 7. Placing the Capital that Funds the Deal There are various ways to fund an apart- ment investment, but our investment funds typically come from two primary sources: banks and equity partnerships. My brother, Joel, manages the capital allocation of new properties. He will typi- cally engage a bank to fund 75%-80% of the total investment, which includes the purchase price, closing costs, and reha- bilitation costs. The other 20%-25% of the funds typically come from equity partnerships, meaning accredited inves- tors put forth capital into the investment and gain an ownership percentage in return. Sometimes we will fund the in- vestment personally in cash. During the capital allocation process, we create our own property packages (also known as offering memorandums). Our property packages include a summary of the property and the reasons we desire to own the property. We always make it a point to describe how we intend on add- ing value to the property and our strate- gy in bringing the property to its full po- tential. We also include maps that out- line nearby attractions, such as colleges, commercial shopping centers, or large employers, and pictures of the property in its current state. The property packag- es always display the current financials of the property and the potential finan- cials we feel we can successfully exe- cute. This gives our investors and lend- ers a strong sense of our intentions and reasoning behind the purchase of the property and how we’ll add value to it as a whole. 8. Closing the Investment Deal Closing does not happen until we’ve met all the criteria in order for us to comforta- bly take over: we’ve underwritten and toured the property, agreed upon a con- tract, conducted extensive due diligence, and allocated all the necessary funds. We have a proven track record of clos- ing quickly, but that can’t happen until each piece of the puzzle is in place. The day before or of closing, we conduct a final inspection of the property to ensure that all things are as they should be. We verify that all the funds are in escrow and that all closing documents have been effectively executed. It is important to have these prepared well in advance to account for unforeseen circumstanc- es. 9. Stabilizing the Acquired Property The stabilization period is the time frame in which we begin all the preemptive work required to operate the property at its full potential, and the process begins on day 1 of takeover. My brother, Jesse, along with a team of over 80 employees, executes and oversees every aspect of this step in the process. In order to stabi- lize a property, we must first hire and train on-site staff, implement our policies and procedures, collect old debts, buy supplies for the property, shift the market positioning if necessary, conduct com- parative market surveys, set up various vendor and utility accounts, create and prioritize cap-ex rehab wish lists, and begin capital improvement. This is a very brief description of stabilization require- ments, as it is a rigorous and thorough process. Stabilizing a property requires unified efforts amongst the operations, capital improvement team and property management divisions, all acting with a long-term mindset. We maintain a very detailed account of the progress taking place, because the stabilization period is all about following through on our ex- pressed plans with the property. 10. Operating the Investment Responsi- bly The work doesn’t end when a property is fully stabilized. Operating a property is a continuous effort on all parts of our compa- ny. We have to keep in mind that each prop- erty is an extension of our brand, staff, and, most importantly, our investors. It is always a priority to operate our properties responsi- bly, as financial assets for our partners and as a housing resource for our residents. We always have to be prepared for anything, which means having the knowledge, funds and staff readily available to make real-time decisions that may be necessary in order to maintain performance. To do this requires unified effort from everyone involved. Brooke and Shelly, our regional property managers, do a phenomenal job of holding each of our prop- erty managers accountable to the high standards of excellence we have collectively put in place. Billy, who manages our construction team, directs all the recommendations on repair and maintenance items, and has culti- vated and trained a highly skilled team of knowledgeable and talented individuals.” Ultimately, operating a property and maintaining its true value comes down to the people behind it: the owners, the staff and the residents. We have seen success in the operation of our proper- ties because we have accumulated a team of outstanding individuals, capable of exceeding and improving upon the high standards of Worcester Invest- ments and Worcester Properties.
  20. 20. 20 RE investment News 2014 Multi Family Investing Thinking about pulling the trigger and investing in your first or maybe your second Multi-Family property, but unsure of where to start? Or, just getting started in real estate investing and researching to find yoru niche? Or possibly you have several single family rentals under your belt, and want to grow your portfo- lio? This All Day Seminar is FOR YOU!! Worcester Investments is a family-owned-and-operated real estate investment company located in Kan- sas City, Missouri. Founded in 2006 by the Worcester brothers and their father, the family business be- gan acquiring rental property almost immediately. Expanding into the Kansas City area through a real estate connection in 2007 and focusing on multifamily real estate, they have continued to see steady growth since their expansion in the Kansas City apartment market. The Worcesters purchase property below its intrinsic value to create steady, passive income through re- sponsible management of its assets. They have collaborated with 30+ partners who have invested over $10M of private capital, and today owns $60M+ of real estate, and currently owns and operates 2,000+ apartment units in the greater Kansas City area. The Worcesters . . . Paul, Jesse and Joel are bringing their expertise to MAREI in this one day Seminar to help you learn the ins and outs of multi family investing, how to find the right investment, how to raise the capital for the purchase, how to analyze the deal, how to negotiate the deal, how to get to closing and how to add value and manage the property day to day. Everyone who attends should walk away with at several new tool in your arsenal to help you make sense of all your options.
  21. 21. 2014 RE investment News 21 A Local Perspective PLEASE NOTE: Regular Price to attend is $99 for Members and $129 for Non-Members. To re- ceive early bird pricing you need to register online, at the August Meeting or via phone before August 21st at 5pm. Members who are participating in our Express Success Program can attend this Seminar for No Charge, just call or email the office to reserve your space. Why Invest in Kansas City Multi Family  Earned Income vs. Passive Income  Pros and Cons of Multiple Investing Vehicles  Local and National Market Trends  Kansas City Metropolitan Market 10 Steps of Apartment Investing  Finding the Right Apartment Investment Deal  Successful Underwriting & Due Diligence  Raising & Placing Investor Capital  Takeover, Stabilization & Operating the Asset Securing & Executing a Purchase Agreement  Structuring & Submitting an LOI  Negotiating With Brokers & Private Owners  Why & When to Request a Retrade  Preparing For the Closing Process Getting the Most Out of Your Due Diligence Period  Structuring a Due Diligence Checklist  Interior & Exterior Property Inspections  Communicating with Existing Residents  Auditing Resident Files & Financial Documents Transition From Single Family to Multi Family  Working Your Way From Small to Large  Evaluating & Projecting Conservatively  Reading & Understanding Financial Statements  Scaling Systems With Your Growth Hiring The Right Team Members For Your Property  How Employees Impact Your Reputation  Being Patient in the Hiring Process  Getting The Whole Truth From the Applicant  Background Checks & References How to Fund Your Apartment Purchase  Banks, GSEs & Private Money Lenders  National Banks & Life Insurance Companies  Debt vs. Equity (Other People’s Money) Partnering With Investors  Investor Qualification & Accreditation  Selecting & Presenting Deals to Investors  Communication Etiquette  Building & Maintaining Investor Confidence Marketing to Investors:  SEC Marketing Regulations  Structuring a Property Package for Investors  Creating & Maintaining Your Annual Portfolio  Disclaimers Every Marketing Piece Should Have Building CredibilityThrough DigitalMarketing  Using Social Media to Build Relationships  Design & Optimize an Investor-Friendly Website  Utilizing Attraction Marketing Through Email  Disclaimers, Unsubscribes & Privacy Policies
  22. 22. 22 RE investment News 2014 Fundamental vs Technical What type of Real Estate Investor Are YOU?By Paul Worcester When it comes to investing, there are two major schools of thought: 1.) fundamental investing (also known as value in- vesting) and 2.) technical investing (also known as trading). A technical investor asks what the market says the invest- ment will be worth tomorrow, deriving a conclusion from external factors. The fundamental investor asks what the invest- ment is worth today according to its intrinsic value, which is derived from factors within the investment itself. For example, two investors go to a shopping mall. The fundamental investor goes to each store, studies the products, their use and cost, and then decides whether to purchase based upon the product’s perceived value. The technical inves- tor sits on the mall bench and watches people go into stores. Never entering the stores, the technical investor bases his buying decision on the patterns and activity of people going into each store, noting what was purchased. Technical Investing Technical investing asks the question, “How quickly can I sell/flip/trade and for how great a profit?” Technical investing does not necessarily look closely at the financial state of the investment, but rather where the property value might be in the future based upon what others will pay for it. Technical investors are primarily going to analyze price movement and market activity as a basis for evaluating an investment opportunity. Technical investing considers many facets that may surely affect the investment, but focus little on the investment itself. Value is derived from where the investment has been and where it is going, but not from within its current state. A technical investor looking at a potential apartment investment might ask the following questions pertaining to the mar- ketplace.  What are others paying for similar apartment properties?  Are there new apartments being built in the area?  Are there new jobs being created nearby?  Will the prices in the area go up? Is transportation convenient?  Are the schools decent?  What kind of crime is around the area?  Is the apartment market healthy? Notice how these questions concern external factors, but do not inquire about the investment itself. Fundamental Investing Fundamental investing is concerned with deep analysis of an investment’s intrinsic value. Fundamental investors are gener- ally looking to hold their purchases longer and are more concerned with acquiring an asset based upon inefficiency in the market valuation. Fundamental investors look at an apartment investment in its current state, the rental income, the ex- penses, and the immediate needs of the property. A fundamental investor makes their profit by adding value to the invest- ment to increase its worth, and so they consult the financial performance of the investment’s internal factors to determine its intrinsic value.
  23. 23. 2014 RE investment News 23 MAREI’s MEMBER BENEFITS PROGRAM —- YOUR OFFICIAL MEMBER BENEFITS PROGRAM —- Mid-America Association of Real Estate Investors Member Benefits Program  Constant Contact* OFFICE SUPPLIES  FedEx Office*  Office Max*  QuickBooks* REAL ESTATE SERVICES  Jamieson Home Team  kcmoHomeBuyer.com  kcInvest.com  RealtyResourceKC.com STAGING  ShowHomesKansasCity.com TITLE SERVICES INSURANCE SUPPLIERS  Asset Protection Insurance Agency  Farm Bureau Insurance  Real Protect INDUSTRY INFORMATION  Personal Real Estate In- vestor Magazine  RE Investment News  Dearborn Publishing*  Local Market Monitor* LANDLORD RESOURCES  AAA Screening*  Rentals.com*  EZLandlord Forms* MARKETING RESOURCES  Click2Mail CONTRACTOR & SUPPLY  Building Trades  Elite Contractors  Choice Cabinet  Home Depot*  Sherwin Williams*  Odor Universe EDUCATION  NationalREIAU ENVIRONMENTAL SERVICES  Titan Environmental FUNDING  Great Plains Funding  Investors Choice Funding  Longhorn Investments  Pulaski Bank  Accurate Title Company TRAVEL / AUTOMOTIVE  Avis*  Budget*  Enterprise* EDUCATIONAL TOOLS  Express Success  Member Library  Professional Housing Provider  National REIA University MEMBER SERVICES  eUpdate  Government Updates  Property Marketing * Offer’s Discounts for Members of MAREI A fundamental investor considering an apartment acquisition would ask ques- tions pertaining to the investment’s performance and condition.  Are the existing rents low?  Are the expenses high?  What is the story behind the apart- ment property?  Is there a problem I can solve or value I can add?  Are there management problems or deferred maintenance?  What is the cap rate?  Are the utilities separated?  What is the physical condition of the property?  What is the physical and economic occupancy?  What is the current cash on cash return? All of these questions speak to the financial and physical condition of the investment as it is in its current state. We find that our investment philosophy aligns more closely with fundamental investing, although we maintain a healthy pulse on technical investment factors surrounding our investment deals. It is important to establish an opinion on the technical factors that may affect our investment, and we certainly take them into consideration. The vast majority of our investment decisions, however, are based solely from within the investment itself. Our conclusions are primarily based on a sound review and thorough under- standing of the financial health of the investment and our confidence that we can solve what is lacking, so we are therefore seeking an intrinsic and inde- pendent valuation. As opposed to tim- ing the market, we choose to funda- mentally evaluate potential invest- ments through internal measurements of the investment.
  24. 24. 24 RE investment News 2014 I want to share with you my thoughts about some types of property you may want to avoid if you plan to maximize your profits from the deals you do. I have personally bought several of the houses I now and recommend you think about not buying. I believe buying any of the following properties will defi- nitely give you a financial seminar you really don’t want to take for numerous reasons. I have taken a few of those financial seminars and I can tell you that you don’t want nor need to go there and make the same mistakes I have made. For those just getting started in the business these examples are a must for you to know so you don’t buy houses that will be extremely hard to sell or rent. Houses in Area’s with Many “FOR RENT” signs. Any house located in an area with many For Rent signs leaves little hope of selling to a family who wants to live in that area and can qualify for a loan. Too many renters in any neighborhood will many times run out the families with small children who can qualify for a loan that want to buy. Houses in Area’s with Many “FOR SALE” signs. Too many FOR SALE signs usually indicate a problem in that neighborhood. Always be sure to find out why there are so many properties for sale before you make an offer to buy one of them. There has to be a reason, find out what the problem is. Houses with a Flat-Roof. A house with a flat roof is not very attractive and will have more roof leaking problems. Few people want houses with flat roofs for this very reason. Houses With No Curb Appeal. Houses to Avoid Important Information about Hard to Sell or Rent Houses By Larry Harbolt
  25. 25. 2014 RE investment News 25 Don’t Miss Larry Harbolt in September Creative Financing Say Good By to Banks September 9th Intro at Meeting September 13th Full Day Training Hosted by MAREI Details MAREI.org/Larry
  26. 26. 26 RE investment News 2014 Ugly houses when looking from the street usually will not make buyers proud to show their extended fami- lies and friends their home. People want to be proud of their home and a house with no curb appeal will always be harder to rent or sell to families who can qualify for a loan. Houses With Steep Driveways. Steep driveways in different areas of the country where heavy snow or icing is normal, many buyers won’t want a house with a steep driveway and this type of house will be hard to sell or rent. Many of these older houses with steep driveways only have room for one car at the top of the driveway and most families have two cars; their other car will need to be parked in the street. This is not a desirable type of house to buy or rent because of this. Houses On or Near Swampy Ground. Damp swampy ground has too many issues to be very desirable. Most parents won’t like their children playing in standing water or in constant wet grass all of the time. Wet yards attract snakes, mosquitoes, allergies and will provide a perfect place for mold to grow and thrive. Believe me you don’t want one of these houses because they will be impossible to sell or rent. Houses With VERY Small Front Yards Too Close to the Street. Small front yards I have found are not popular with the majority of home buyers or long-term renters. Most people like a front yard where they can have some nice landscaping and get as far away as possi- ble from the traffic noise. Houses On Busy Streets. Most families with children fear their children will dash out into the street and get hit by a fast moving car. They also don’t want difficulty backing into traffic and it will always be TOO NOISY for most buyers or renters. These properties are harder to sell or rent. Houses In or Near a War-Zone. Families that can qualify for a loan usually prefer NOT living close to areas where there is gang activi- ty, drugs being sold on every corner, and undesira- ble people found everywhere. Houses Near an Industrial Area Close to Facto- ries. This is NOT an area where most families want to live. Noise, Smoke and Fumes and heavy Semi-truck traffic is common. These areas are not beautiful are- as to live. Houses Near an Airport or a Busy Highway Airports and busy highways are always VERY noisy. This is a turn off for most people who want to live in a quiet, peaceful area. Houses Where Someone Was Murdered or Com- mitted Suicide. I won’t buy these houses because I fear if a new family moved into a house where someone was mur- dered or committed suicide without knowledge of what happened there and the children at school were to tell the new children now living in the house what actually happened could cause trauma for the chil- dren now living in the house and I don’t want to be responsible for doing that to the kids. Houses That Are Just Plain UGLY. Ugly will always be difficult to rent or sell and will be far more costly to correct the problem. When you find a house that is just plain ugly turn and walk away. There are thousands of houses for sale, so why would you want to waste your time trying to com- pletely overhaul an ugly house when there are plenty of pretty houses available across the country? Houses with VERY Small Bedrooms and Small Closets and Small Square Footage of Living Space. These houses are not usually very popular for the average family that can qualify for a loan. These houses eliminate over 75% of your buyers and renters. These houses ONLY work for a single per- son, a couple without children, a family with only one child. If a family has two children of the same sex, if
  27. 27. 2014 RE investment News 27 they have a son and a daughter a three bedroom house will be need- ed. Any House Where You Have to Walk Through a Bedroom to Get to a Bathroom Having a functionally obsolete screwed-up floor plan definitely will be hard to rent or sell. You can fix them and make them functional, but why would you when there are so many houses that don’t need to be fixed to overcome the undesira- ble houses? Houses with LOW CEILINGS in Each Room Low ceilings are definitely a NO SELL and will be hard to rent and will be Too Expensive to fix. Find- ing a house with this problem is a house you need to quickly walk away from. Houses That Need Major Struc- tural Repairs. Why buy a house that needs major structural work done to it when there are thousands of other hous- es that you won’t need to spend that much time and money to fix? These houses are definitely some- thing beginning investors won’t want to tackle. Houses That Are Over-Priced No Matter Where They Are. Only a fool would pay more for a house than it is worth unless they plan to live in the property. If you over-pay for a house there is no room for a profit. So why would you buy that house in the first place when there are so many that are not over-priced? Houses on Dead-End Streets in Older Parts of Town without a Cul-de-Sac These houses aren’t particularly popular with most home-buyers who can qualify for a loan. These are houses that are located where they get less city attention for maintenance. Houses with Wet Basements These houses have a largehouses amount of wasted space that will be conducive to constant mold problems and will also create other problems with the house because of the moisture attracting termites and salamanders. Musty houses are always hard to rent or sell. Houses with Very Small Back Yards A house with a small back yard will always be less attractive to most families who want a place for the family to barbeque, eat and a place for the children to play or a place to put a pool. Stay away from small back yard houses. Houses Located On a Dirt Road Within a City Houses located on unpaved streets within a city are not only far less desirable, they will be nearly impossible to rent or sell because of the dirt blowing every time a car passes. Dead end streets are al- ways less maintained than any through street. Houses Located Close to a Sew- age Disposal Plant Needless to say – the smell will be the deterrent and will be difficult to rent or sell. Houses Located Near a Garbage Dump or a Garbage Transfer Station Houses next to a garbage dump or a garbage transfer station will be extremely difficult to rent or sell be- cause of garbage trucks coming and going all hours of the day and night and these places attract rats, rodents of all kinds and the smell will definitely not be acceptable to any qualified buyer or renter. I hope you now have a better idea of some of the houses you don’t want to own that will be hard to sell or rent and making a profit will be far more impossible to do. Happy investing
  28. 28. 28 RE investment News 2014 Spend an evening with Larry Harbolt, the Nations Leading Creative Seller Financing Expert Never Step Into a Bank Again & Buy All the Houses You Will Ever Need to Become Independently Wealthy! SEPTEMBER 9TH, 2014 @ 6pm Meeting Space in KC Metro to Be Determined Please Check Website Real Estate Transaction.  Determining What You Need to Think About Before You Every Make an Offer to Pur- chase.  What Type Properties Generate the Most Profit?  Why You Should NEVER Use Dollars Per Square Foot as a Cost Factor to figure the Value of Any Property.  “15” Types of Properties to Avoid Like the Plague.  The Multiple Different Types of Profit Real Estate Can Give You.  What Are the Key Questions You MUST Ask Every Seller?  Killer Negotiating Strategies That Rarely Fail.  How to Overcome Your Fear of Talking to Sellers.  Larry’s “8” Basic – Simple Offers  “8” Ways to Get Started When You have NO MONEY and FAR LESS THAN GOOD CREDIT.  Key Factors About the Paperwork You Use That Is Critical to Your Deals.  Who You Need on Your Team to Build Suc- cess the Fastest. Larry will be back at MAREI on Saturday September 27th for a full day training seminar, we hope you can join us. MAREI is excited to announce that Larry Harbolt will be our special guest on Sep- tember 9th at our Monthly Meeting. Larry is the Nation’s Leading Expert on Creative Seller Financing both to buy and to sell. The Truth is many investors only know one way to buy property… with Cash. And now that banks are not lending to just anyone, where do investors turn? The investor today is likely dead in the water unless they know how to Buy with Creative Owner Financing and learn how to Sell with Creative Owner Financing. Larry has over 35-plus years of experience doing just that. That is why he has been called the Master at teaching how to buy houses with No Money and No Cred- it using Creative Owner Financing. At the September MAREI meeting you will learn:  Wholesale at Lightning Speed = Pay off Debts & Stable Cash Flow!  Buy Properties Without Banks! = No Credit and No Money!  Become Wealthy Owning Properties That Are Paid Off in 8.3 Years!  Create Non Recourse Financing and Never Gamble Again!  Sell at Lightning Speed! Don’t Be a Puppet to a Bankers Whim!  Become Wealthy and Be Done in 3-5 Years!  The Key Components of Every Successful MAIN MONTHLY MEETING MEETING AGENDA 6:00 Meet & Greet Networking & Vendors 6:45 Introductions Haves & Wants 7:00 Creative Seller Financing With Larry Harbolt 9:00 Late Night Networking At Nearby Establishment Note we are currently in nego- tiations with several Overland Park Hotels and hope to have a new location by this meeting. Please check Website for ex- act Location. MAREI Members Can Attend For FREE and guests for $15.00 If Pre-Registered. Door Price $25.00 MAREI.org/September
  29. 29. 2014 RE investment News 29 REGISTER FOR THIS EVENT AT MAREI.org/LARRY Build your Business with the Ultimate Fast Track Success Workshop. . . . Right now is the best time in modern histo- ry to buy real estate. . . . If you have the knowledge on how to make money in this or any market . . . And that is how to buy real estate profitably with only $10 down, even if you have bad credit or are bankrupt! At this workshop Larry will teach you . . .  Buy real estate profitably in any market or cycle.  Learn how to buy real estate when you have No mon- ey.  Buy real estate when you have No good credit.  Learn how to create the terms to make cash today.  Learn how to overcome seller objections like a pro.  Learn the right questions that will create Golden Deals.  How to create extra profit out of thin r  Never have to beg for or apply for a loan again.  How to buy and sell all the property you want, no banks.  How to structure offers with no payments or interest and get the seller to gladly accept. This will drive your cash flow through the roof.  Why you can buy millions of dollars in real estate and never have a debt show on your credit report or be person- ally liable for a penny.  Build your income stream, like the banks have, acquire free assets, without investing a dime.  How to change the terms of the loan months or years after the closing and make the seller ecstatic to do so.  Build an empire from monthly cash flow and cure neg- ative cash flow – The secret only a handful of people know how to do.  Big profits from the “deal after the deal”. All seller- financed deals have back end profit centers if structured properly, and will cost you a fortune not knowing them.  How a few carefully chosen words you can easily mas- ter in minutes can potentially earn you big paydays when you’re ready to cash out your seller. Come and join Larry on Saturday, September 13th, 2014 for The Ultimate Fast Track to Your Business Success Workshop. Bring a new pad and a couple sharp pencils because Larry promises you will leave with New Methods, Processes and Systems that are Efficient, Effective! And WHEN YOU Learn them, they can be measured by the amount of NEW CASH in YOUR bank account. Larry is the real deal who uses what he teaches in his own business. Larry will be sharing A Full Day Deal Structuring Seminar with Larry Harbolt Saturday September 13th, 2014, 8:30 AM to 5:00 PM KC Metro Area Exact Location to be Determined MAREI Member Pricing is just $49 and Non-Member’s attend for $69 Early Bird Pricing of $29 for MAREI Members and $49 for Non-Members MAREI Members bring a spouse or business partner for just $20 (Early Bird $10) Extra Special Pricing offered at August & September Meetings. Be sure to Attend.
  30. 30. 30 RE investment News 2014 MAREI MEMBERSHIP MEETINGS HELD AT: Main Monthly (1st Tuesday of the Month) Career Education Systems Ward Parkway Shopping Center 8600 Ward Parkway Kansas City, MO We suggest parking on State Line Side by Starbucks. Meeting space behind the elevators. Other Events Live and Online Full Details on Calendar at MAREInet.com MAREIMid-AmericaAssociation ofRealEstateInvestors ARealEstateCommunity GUEST PASS Name: ______________________________ Date: _______________________________ Email: _______________________________ Source: ______________________________ For first time guest to visit main meeting. GuestPassisavailableforfirst timeattendeestoMAREI.Ifyou haveattendedbefore,explore membershipoptionsorpay guestfee.
  31. 31. 2014 RE investment News 31 Sherwin-Williams is a National REIA approved supplier of paint and related products. The alliance results in quality and value with consistent pricing and substantial savings on the products that you use the most. For maximum savings we recommend the following products: PROMAR 200 ZERO VOC, PROMAR 400 ZERO VOC, PAINTERS EDGE, SUPERPAINT EXTERI- OR, A-100 AND WOODSCAPES. Since 1866, Sherwin-Williams has been at the forefront of innovative coating and color technologies, With excep- tional products and services, Sherwin-Williams can help you get the job done fast and get the job done right.  A wide range of coatings that offer quality and value from a brand you know and trust.  Applicators, tools and equipment to get the job done right.  Substantial savings and credit pro- gram.  3,0900 stores and 2,200 represent- atives provide fast, local service. Products are readily available from Sherwin-Williams stores everyday.  Phone or fax ordering and on-site delivery available.  Expert advice for property surface prep and selecting the correct coat- ing systems and supplies.  Broad range of coatings to meet the most stringent VOC regula- tions.  Wide selection of flooring with in- stallation available from more than 125 Sherwin-Williams Floorcover- ing Centers.  Recommendations for local experi- enced painters.  Color consultation and a wide range of color tools in-store or online for easy selection.  Online account management, in- cluding view balances and other history, make payments and save favorite information—register on myS-W.com. MAREI members receive substantial savings by use their MAREI member discount card that ties their savings into our National Discount Pricing with National REIA.
  32. 32. 32 RE investment News 2014 MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORS The Mid-West’s Premier Real Estate Professional Association COMMUNITY : NETWORKING : EDCUATION : OPPORTUNITY MAREI is a Real Estate Community committed to providing Educational & Networking Opportunities. We strive to introduce potential and existing real estate professionals to all areas of the real estate investing industry through meetings, workshops, & seminars, both live and online. We keep our members informed of legislative issues and the latest strategies and technologies. MAREI provides a positive, no pressure environment where the individual professionals can grow, network and expand their business. Plus we bring members together for the greater good be it through discounts from our combined buying power or making our voices heard when there are governmental or community issues. JUST A FEW OF OUR INDUSTRY PARTNERS “You do such a great job at bringing in great ideas & speakers, we are so very happy we joined MAREI this year!” “I wanted to share with you that my most recent rebate check was $349.94 !! Wahoo! It’s like free money! ” “Save your hard earned dollars, join MAREI for $99 yr and have more benefits and learn from oth- er members as you need to do so. Develop friends and associations that will en- dure and enhance your real estate investing from now on. You will be glad you did.” - Kara K - Christoph B - Don S MAREInet.com

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